Aqid ERPNo VAT, no excise, no personal income tax
Kuwait has issued no VAT law, so a Kuwaiti company charges none on its invoices, files no VAT return and has no VAT number to quote. It has issued no excise law either: in January 2025 the Minister of Finance said one on goods harmful to health was being prepared, and none has been published since. Individuals pay no income tax: salaries, Kuwaiti or expatriate, are paid without any tax withheld.
What a Kuwaiti employer does deduct from pay is the PIFSS contribution for Kuwaiti staff, which is social insurance, not tax, and has its own article on this blog.
Income tax: foreign companies
The Income Tax Decree of 1955, as amended by Law No. 2 of 2008, charges a flat 15 % on the net taxable income of a body corporate carrying on business in Kuwait. The Ministry of Finance calls it the corporate income tax on foreign companies: a company wholly owned by Kuwaiti nationals does not pay it.
Where a foreign company is a partner in a Kuwaiti company, the tax is worked out on the foreign partner's share of the profit. A simplified example, before the adjustments the tax rules make to accounting profit:
| Net profit of a Kuwaiti WLL | KWD 100,000.000 |
|---|---|
| Share held by a foreign company: 40 % | KWD 40,000.000 |
| Tax at 15 % on that share | KWD 6,000.000 |
| Tax on the Kuwaiti partners' 60 % | KWD 0.000 |
The income tax return
- Register with the Ministry of Finance within 30 days of starting the activity or signing the contract.
- The tax period is normally the calendar year, and may not exceed 18 months.
- The declaration is due by the 15th day of the fourth month after the period ends; the Ministry can extend it by up to 60 days.
- The tax is paid in one go or in four equal instalments, on the 15th day of the fourth, sixth, ninth and twelfth months after the period ends.
- Filing or paying late costs 1 % of the tax for each 30 days, or part of 30 days, of delay.
Zakat and NLST: shareholding and listed companies
Each is worked out on net profit as its own rules define it, so the base is not always the bottom line of the income statement. Check the base with your adviser.
- Zakat (Law No. 46 of 2006): 1 % of the net profit of Kuwaiti shareholding companies, listed and closed.
- National Labour Support Tax (Law No. 19 of 2000): 2.5 % of the net profit of Kuwaiti and GCC companies listed on Boursa Kuwait.
The Domestic Minimum Top-up Tax, from 2025
Decree-Law No. 157 of 2024 introduced a Domestic Minimum Top-up Tax for fiscal years starting on or after 1 January 2025, with executive regulations issued in Ministerial Resolution No. 55 of 2025. It applies to Kuwaiti entities of multinational groups whose consolidated revenue was at least EUR 750 million in two of the four preceding years, and brings their Kuwaiti tax up to 15 %.
For a group in scope, the Ministry of Finance says it replaces all the current taxes: NLST, Zakat, the Divided Neutral Zone tax and the corporate income tax on foreign companies. Groups in scope had to register with the Ministry within 120 days of 1 January 2025.
What applies to a small Kuwaiti company
So the usual answer is that such a company pays no tax on its profit at all. A foreign partner, a conversion to a shareholding company or a listing changes that answer.
- A WLL owned only by Kuwaiti nationals: no income tax.
- Not a shareholding company: no Zakat.
- Not listed on Boursa Kuwait: no NLST.
- Not part of a group with EUR 750 million in revenue: no top-up tax.
- Still relevant: government bodies and other payers named in the law hold back 5 % of each contract payment until the contractor produces a tax clearance certificate. A Kuwaiti company can ask the Ministry of Finance, through Kuwait Government Online, for a certificate that it owes no tax and recover the 5 %.
How Aqid ERP helps
Aqid ERP keeps an append-only ledger in three-decimal dinars with a Kuwaiti chart of accounts in Arabic and English, so no posted entry is ever edited. Profit and loss, trial balance and the general ledger by period open down to the documents behind each figure, and a reported period can be locked so later corrections post to the open one.
It does not compute or file Kuwaiti income tax, Zakat or NLST, and it does not model the 5 % retention: your adviser prepares the declaration from the books Aqid ERP keeps.